The Lights Have Stayed On: Realities behind ‘Blackout Britain’

Headlines warning that “the lights will go out”

because of power station closures and increasing

use of renewable energy have been a familiar

sight for at least a decade. Yet the lights seem

stubbornly to be staying on.

Because of what seems to be a divergence of

rhetoric and daily reality, ECIU commissioned a

short report summarising statistics and trends in

power outages in the UK. We also briefly looked

into the history of the “lights will go out” meme in

the media, and took a glance at the experience of

other European countries.

Media Briefing 12 October 2015

by Matthew Aylott, Dave Jones & Richard Black

 

 

   

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Table of Contents

Executive Summary ............................................................ 3

Generation X: Outages in the real world ............................. 5

Cuts in the network ............................................................. 5

How the lights stay on ......................................................... 7

New tools ............................................................................ 7

Outlook for this winter ......................................................... 8

The next few winters ........................................................... 9

Why is coal closing and what will replace it? .................... 10

Managing greater intermittency ........................................ 11

Media blackouts ................................................................ 13

Conclusions ...................................................................... 16

 

   

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EXECUTIVE SUMMARY

Media headlines warning of imminent blackouts caused by the closure of older power

stations and increasing reliance on intermittent sources of power such as wind and solar

have become commonplace over the last couple of years. Yet the evidence paints a very

different picture of our electricity system. It tells us that the system is highly successful at

delivering a reliable supply of electricity; we were only able to identify one outage caused by

generation issues in the past decade, when two thermal power stations simultaneously lost

power. Otherwise, the Grid has kept the lights on even during sudden failures of power units

such as the fire at Didcot B last year.

Virtually all power cuts are due to faults in the local distribution network of wires and cables

that transport electricity from the main transmission grid to customers. Faults are typically

caused by weather conditions such as heavy rain and high winds, or by contractors

accidentally cutting through underground cables. Such failures are responsible for some

quarter of a million household disconnections each year.

In the future, the electricity system in Britain will become increasingly reliant on renewables.

But that will not necessarily mean greater risk of power cuts. Renewable deployment is

higher in both Denmark and Germany than in the UK, yet they have among the most reliable

electricity systems in the world.

Three coal-fired stations, Eggborough, Ferrybridge and Longannet, are due to close at the

end of this winter. This suggests a slim capacity margin during the 2016/7 winter. Thereafter,

construction of new power stations and interconnectors, together with steadily falling

demand, should ease the situation. The government could help further through policies that

reduce and manage demand, and incentivise building of new power stations and

interconnectors. But withdrawal of support for energy efficiency and renewable energy

schemes and the pro-incumbent design of the Capacity Mechanism mean that opportunities

to update the UK’s electricity system are being missed.

 

   

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In summary:

Power outages relating to generation are vanishingly infrequent. We were able to identify only one significant event over the last 10 years –affecting about half a million people for under an hour

The vast majority of power cuts are due to problems with distribution of electricity, not with generation

The National Grid and district networks have a good track record in keeping the lights on even when power stations shut off abruptly due to a sudden fault

Even when a generator issue did put the lights did out, it was for minutes, and for a small proportion of the population – nothing like the “rolling blackouts” of the 1970s

Denmark and Germany source higher proportions of their electricity from intermittent renewables than the UK, but citizens experience fewer outages

The balance between supply and demand is likely to be tightest in the 2016/7 winter, but after that the situation should ease as new power stations and interconnectors come online

Coherent policies to incentivise building of new power stations and interconnectors, or to manage peak demand, would enhance security of supply in the future.

 

   

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GENERATION X: OUTAGES IN THE REAL WORLD

Generators are contracted to deliver electricity to a supplier, and they pay a penalty for failing to deliver; so maintaining reliability is a top priority. Most generator shutdowns are planned well in advance, largely for maintenance so that failures become less likely.

However, faults can and do occur. There were 900 instances of unplanned failures at coal and gas power plants for the first nine months of this year alone, according to REMIT data. But even major generator failures do not make blackouts a foregone conclusion.

For example, on 19th Oct 2014 there was a major fire at Didcot B gas-fired power station,1 which resulted in the sudden and unexpected loss of 0.7 GW of capacity. At the time, the grid was already operating with lower than expected capacity following the temporary closure of 2.3 GW of nuclear power (Heysham 1 and Hartlepool)2 after cracks were found in a boiler spine at Heysham. Together, these incidents were expected to put strain on the electricity grid; but the lights stayed on.

In fact, based on information from National Grid, conversations with expert academics and news archive, we were able to identify only one incidence in the last 10 years when a generation failure resulted in a loss of power to customers – on 27th May 2008.3

It was caused by unrelated outages at two thermal power stations (Longannet in Fife and Sizewell B in Suffolk), which occurred within five minutes of each other. In total this represented 1.5 GW of generation, approximately 5% of demand. The National Grid initially responded by dropping the voltage in the network. This would have had no noticeable effect on most consumers, but dropping the voltage inadvertently caused incorrect control settings at embedded generators to trip, resulting in the loss of a further 0.3 GW of generating capacity. With no remaining available fast-acting generation or demand-response reserve margins, the frequency fell further, and distribution network operators undertook a protective shutdown of parts of the network, under pre-arranged rules, disconnecting 0.6 GW of demand.

The incident affected an estimated 580,000 homes, and the average duration of loss of supply to customers was 20 minutes.

The rolling blackouts that have plagued the UK historically are no longer relevant, with much more diversified fuel supplies. Similarly, blackouts that have occurred in other countries are                                                                                                                1 BBC (2014), Major fire at gas-fired Didcot B power station: www.bbc.co.uk/news/uk-england-29684205

2 BBC (2014), Nuclear reactors may stay offline until end of year, EDF says: www.bbc.co.uk/news/business-2 BBC (2014), Nuclear reactors may stay offline until end of year, EDF says: www.bbc.co.uk/news/business-29058644

3 National Grid (2008), Report of the investigation into the automatic demand disconnection following multiple generation losses and the demand control response that occurred on the 27th May 2008: http://www2.nationalgrid.com/assets/0/745/746/3464/3466/3488/3475/623fcdf6-31e3-416a-bfb7-c4edbfd763d2.pdf

 

   

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the result of factors that are not relevant in the UK. For example, the “type faults” where a problem at a (normally nuclear) power station results in many power stations needing to be closed; or droughts in hydro-dependent countries.

CUTS IN THE NETWORK

Faults in local distribution networks are responsible for virtually all power cuts in the UK, with a much smaller proportion down to problems in national transmission (and, as we have seen, essentially none caused by generation issues).

National Grid owns the high-voltage nationwide transmission network, and also operates it in England and Wales (other companies, Scottish Power Transmission and Scottish Hydro-electric Transmission, provide the service in Scotland). The transmission network operators in Britain have a good track record of ensuring the network is reliable. For example, National Grid has kept the reliability above 99.99999% in each of the last three years.4 Figures are similar north of the border.

In 2013/4, there were 44 power cuts in Great Britain due to failures in the transmission network.5 Such incidents usually last no longer than 10 hours. Around half are caused by adverse weather conditions, such as lightning, high winds or ice.6

Low-voltage distribution is managed by 14 regional Distribution Network Operators (DNOs), and these systems are responsible for most of the blackouts that customers experience. These are smaller in scale than transmission faults. Altogether there are around 230,000 disconnections7 per year in the distribution networks, three quarters of which are unplanned outages. These can affect anything from a single household to a network of several thousand homes. In 2013/14, there were 55 “customer interruptions” per 100 customers caused by distribution system faults; these typically lasted for an hour or less, and were mostly small scale.8 Most were caused by events beyond the control of the DNO, such as a worker drilling through street mains cables or adverse weather conditions.9

                                                                                                               4 National Grid (2015), Customer service and network reliability: http://www2.nationalgrid.com/responsibility/how-were-doing/grid-data-centre/Customer-service-and-network-reliability/

5 Bell K (2015), How come the lights don’t go out more often? www.bartlett.ucl.ac.uk/energy/docs/bell-presentation-slides

6 Murray K and Bell K (2014), Wind Related Faults on the GB Transmission Network: http://strathprints.strath.ac.uk/50258/1/PMaps2014_Wind_Related_Faults_on_the_GB_Transmission_Network_Updated_Kirsty_Murray.pdf

7 Ofgem (2015), Direct Communication.

8 Ofgem (2014), RIIO-ED1: Final determinations for the slow-track electricity distribution companies: www.ofgem.gov.uk/ofgem-publications/91564/riio-ed1finaldeterminationoverview.pdf

9 Ofgem (2012), Electricity Distribution Annual Report 2010-11 - supporting data file: www.ofgem.gov.uk/publications-and-updates/electricity-distribution-annual-report-2010-11

 

   

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HOW THE LIGHTS STAY ON

National Grid is tasked with ensuring that supply matches demand across Britain on a second-by-second basis. In virtually all instances, it can balance the system by requesting power stations to change their load. National Grid makes sure that power stations running already have some spare capacity, called spinning reserve, which can help them react quickly. This is in addition to fast-acting hydropower plants, and diesel and gas generators, which are contracted through the Short-term Operating Reserve (STOR). National Grid can also switch on inactive large power stations, although this takes a couple of hours or more.

If these measures are not enough, there is a set of emergency measures that acts as a further cushion. National Grid can lower the voltage of the grid; cut demand through “triads”; increase imports through interconnectors with other countries; and call on some generators to operate at a higher than normal output for a short period of time (Maxgen).

Here is a list of the options quantified:

§ Maximising interconnector imports from neighbouring countries

§ 3.5GW10 peaking plant contracted in the “short-term operational reserve”

§ 1.2GW11 voluntary demand reductions by heavy industry via “triad-avoidance”

§ 0.3GW12 “over generation” at existing power stations via “maxgen” contracts

§ 1.2GW reduced demand via voltage reductions13.

NEW TOOLS

Two new tools have recently been introduced to enhance security of supply further.

One is the Capacity Mechanism (also known as Capacity Market), which is designed to make sure there is enough capacity to meet demand from October 2018. It can incentivise the building of new gas-fired power stations, interconnectors, and demand-side measures, or it can fund existing gas, coal and nuclear stations to remain open. The first auction was held in December 2014 for contracts that begin in October 2018. The vast majority of the contracts were for one and three years, and will channel funding to existing coal, gas and nuclear stations. However, contracts were awarded for building 2.5GW of new capacity and demand response. The fact that the auction was hugely oversupplied – 9GW of existing                                                                                                                10 Estimated by Simon Skillings in his report “Assessing the Balance of Risk Associated with Coal Plant Closures” 11 1.2GW was estimated by National Grid as what occurred last year, on page 18 of their Winter Outlook.

12 Estimated by Simon Skillings in his report “Assessing the Balance of Risk Associated with Coal Plant Closures” 13 1200MW was observed the last time this was enacted by National Grid, in 2008. See page 17 of this report.

 

   

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plant that applied was not given a contract – gives a clear indication that there is sufficient capacity available.

The second mechanism is the Supplemental Balancing Reserve (SBR). This was introduced in from Winter 2014/2015 as a temporary policy, as a stop-gap before the Capacity Market goes live from October 201814. It allows National Grid to pay to open mothballed power stations, and also pay for additional demand-side response.

In addition to this, Ofgem are also changing the rules for imbalance pricing, which will intentionally lead to more spikier prices, which should act to reward peaking plant, storage and demand response further.

OUTLOOK FOR THIS WINTER

National Grid published its Winter Review and Consultation on 15th July 2015, in which it gave an initial assessment for this winter, which we paraphrase in this section below. National Grid is not expected to change its assessment substantial ly when it publ ishes i ts winter outlook later this week.

Margins will be tighter this winter than for a few years. Margins have been very high over the last few years; gas capacity was built to replace coal plants, but the coal plants closed later than originally planned, resulting in a temporary oversupply of capacity. The last of the coal plants that needed to close by December 2015 did so by 2014, hence margins are now tightening once again.

Margins are now a little below National Grid’s ideal levels, so in order to give more back-up, it has paid for extra power stations to be available this winter16. This included bringing gas CCGT’s out of mothball. This will add 50p to each electricity bill, and will increase the capacity margin to within comfortable levels (see graph). Grid contracted 2.56GW of de-rated capacity; this comprises mostly gas-fired power stations:

§ 2185MW of CCGT gas (Peterhead, Killingholme, Deeside, Barry, Corby)

§ 111MW small oil units

§ 100MW coal unit

§ 177MW demand response                                                                                                                14 See https://www.ofgem.gov.uk/ofgem-publications/84629/nationalgridsproposednewbalancingservices-draftimpactassessment.pdf

15 See link here. http://www2.nationalgrid.com/UK/Industry-information/Future-of-Energy/FES/Winter-Outlook/ 16 See press release http://media.nationalgrid.com/press-releases/uk-press-releases/corporate-news/additional-reserve-secured-for-winter-1516/

 

   

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Figure  1-­‐  Winter  15/16  outlook,  courtesy  of  National  Grid  /  FT

This suggests that the chances of generation-related electricity supply interruptions this winter is very low.

THE NEXT FEW WINTERS

The outlook for the following winters is not quite as clear. Since March, there have been public announcements that three coal-fired power stations will close at the end of March 2016 – Eggborough (1940MW), Ferrybridge C (980MW) and Longannet (2260MW). One new CCGT, Carrington (900MW), is due to open next year.

In total, these changes suggest that there will be around 4.7GW less conventional capacity next winter as compared to this coming winter. So the capacity margin is likely to be tight, and may even be negative. However, this does not necessarily imply a greater risk of outages:

§ National Grid has all the tools discussed above in place to balance the system § There is more installed wind capacity on the system, and the National Grid tends

to under-estimate the capacity of wind farms to supply power at peak times. Last winter, wind provided twice the amount of generation at peak hours than Grid had planned for.

§ National Grid is likely to tender for even more capacity for the winter reserve. It is more than possible that coal power stations that will “close” in March 2016 will bid to operate as reserve capacity for the following winter. It is also possible that gas-fired power stations will be brought out of their mothballed state, eg EON’s Killingholme, part of South Humber Bank, and King’s Lynn. Reassuringly, the tender earlier this year had a further 2.5GW of capacity that was offering to be contracted that was not needed in the end.

 

   

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WHY IS COAL CLOSING AND WHAT WILL REPLACE IT?

Eggborough, Ferrybridge and Longannet are closing simply due to economics: when Scottish and Southern announced the closure of Ferrybridge, it said it would have lost £100m over the next five years by keeping it open. The carbon price is impacting the economics, and in some cases investment is needed to meet tightening air pollution standard. Most of the UK’s coal fleet is more than 40 years old (see figure 2).

Figure 2: Source DECC, Sandbag

Closing the coal-fired stations would make a substantial contribution to achieving climate change targets. The 10 remaining stations emitted 17% of all the UK’s greenhouse gas emissions in 2014. Also, they emit 20% of the UK’s NOx emissions, causing health impacts.

The Times and Bloomberg recently reported that the government would seek the closure or conversion of all remaining coal-fired power stations by 2023; if confirmed, this will mean that some will probably come off the system earlier than previously expected. The reports say that operators would have the options of converting to biomass burning, as is underway at Drax, or fitting carbon capture and storage equipment. The government has not confirmed the move, however.

Other than the three stations named above, closures are unlikely before September 2019. That is because most of the remaining stations are contracted under the Capacity Mechanism to be available from October 2018 to September 2019. Only Rugeley (1000MW) and one unit at each of West Burton and Fiddlers Ferry (1000MW) have not been contracted.

So what could replace the closing capacity? The answer is a little bit of everything:

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§ New gas power stat ions. As mentioned, Carrington (900MW) is being commissioned next year. Also, in last year’s capacity market auction, Trafford Power (1656MW) received a new-build capacity contract, to be available from October 2018. A further 5813MW of gas power stations were not successful in their bids, which proves there is a pipeline of new capacity available, if it is incentivised.

§ New peaking plants. In last year’s capacity market auction, 740MW of small oil and gas peaking plants received new-build capacity contract to be available from October 2018, and a further 1361MW of peaking plants were not successful in their bids, which proves again that there is a pipeline of new capacity available.

§ Demand response. The UK makes far less use of demand response than other countries such as the US. Only 172MW was contracted in the Capacity Mechanism from 2018, and only 177MW is contracted in this winter’s reserve. (Demand response providers have lodged a legal challenge over the tiny fragment of the Capacity Market for which they have been allowed to bid.) The think-tank Sustainability First estimates that there is potential for up to 18,000MW of demand response available at the winter peak17.

§ Interconnectors. In 2014, Ofgem announced18 a list of five interconnector projects underway which, if completed, could establish 7500MW of interconnection with various European countries within five years. The UK-Norway link is currently underway, and has a capacity of 1400MW. Think-tanks such as Policy Exchange have shown that increasing interconnection is an efficient way to improve security of supply.

However, there are some deficiencies in the capacity market that need addressing. The Financial Times on Friday 9th October 2015 quoted Keith Anderson, chief corporate officer of Scottish Power, as warning that the design of capacity auctions do not encourage companies to build power plants because of the way they were structured, and urging ministers to overhaul the process. Demand response provider Tempus Energy is also suing the UK Government because the capacity market does not properly consider the needs of demand response or storage, which means these technologies are not close to fulfilling their potential.  

MANAGING GREATER INTERMITTENCY

As Britain’s economy progressively decarbonises in response to climate change, a greater proportion of electricity is likely to be generated by renewable technologies, some of which produce electricity intermittently. This has led to criticism that renewables cannot be relied upon, and that greater use of them will leave the electricity system vulnerable.

                                                                                                               17 http://sustainabilityfirst.org.uk/docs/2014/Sustainability%20First%20-%20Paper%2013%20-%20Realising%20the%20Resource%20-%20GB%20Electricity%20Demand%20Project%20-%20Overview%20-%20October%202014.pdf 18 https://www.ofgem.gov.uk/publications-and-updates/ofgem-shortlists-five-new-electricity-interconnectors

 

   

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Wind power is more useful in security-of-supply terms than is generally assumed, with generation often good on winter evenings with high electricity demand. In the UK last winter, for the 2% of hours across the year when demand was highest, wind generated at least 1GW in 80% of cases (Figure 3). So although there will be times when demand is high but the wind doesn’t blow, this is the minority of cases.

 

Figure  3  Correlation  of  wind  on  peak  demand  in  Winter  14/15,  by  Sandbag

More importantly, if the thesis that high renewables leads to insecure supply were true, people in countries whose use of intermittent renewables is higher than the UK’s would be expected to be at greater risk of power outages. However, the experience of Germany and Denmark shows this is not the case. The UK gets around 11% of its electricity from wind and solar photovoltaics. Germany gets more than 15% from wind and sun19, and in Denmark this figure is higher still at around 44%20. Yet these countries also have among the lowest levels of power outages per citizen every year (Figure 4) – substantially better than the UK.

                                                                                                               19 BDEW (2015), Renewable energy for the first time the most important energy sources in the German power mix [Translation]: www.bdew.de/internet.nsf/id/96C1C1AF87BC5338C1257DBD00309E50/$file/141229_BDEW_veroeffentlicht_Erzeugungsmix_Anlagen_zur_PI.pdf 20 Energinet (2015), Environmental report for Danish electricity and CHP - Summary of the status year 2014: http://energinet.dk/SiteCollectionDocuments/Engelske%20dokumenter/Klimaogmiljo/Environmental%20report%20for%20Danish%20electricity%20and%20CHP%20-%20Summary%20of%20the%20status%20year%202014.pdf

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Figure  4  -­‐ Minutes of power outages per year (excluding exceptional events) based on SAIDI. Source: CEER and Germany Energy Transition.21  

Furthermore, as Germany adds more renewables, the reliability of its supply is rising (Figure 5).

The experiences of these countries suggests that by taking a system-oriented approach, with integrated use of mechanisms such as storage, demand response and interconnection and a robust transmission and distribution network, the UK could provide a secure electricity supply with much higher use of intermittently-generating renewables.  

Figure  5  -­‐  Source BNetz, Sandbag

                                                                                                                 21 Germany Energy Transition (2014), German grid more stable in 2013: http://energytransition.de/2014/08/german-grid-more-stable-in-2013/  

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Germany: More secure system despite renewables

Minutes lost per customer (left) GW Renewables Installed Capacity (right)

 

   

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MEDIA BLACKOUTS

There have been multiple scare stories about the future of electricity generation in Great Britain, such as the warning by ex-environment minister Owen Paterson MP just over a year ago of “looming blackouts”.

Despite the virtually total non-appearance of generation-related power cuts in the last decade, the media has been abuzz with predictions that they were about to happen. Since 2005, mainstream national papers have carried nearly 500 distinct articles either warning that the lights will go out, or discussing the idea that they might if something specific didn’t happen.

The Express leads in terms of the number of articles explicitly warning of blackouts, with 35, followed by the Mail on 17 and the Telegraph on 14. Express headlines included Britain facing shutdown (2005), Britain is facing blackout mayhem (2006) and Britain facing blackout crisis (2008).

 

   

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Reports, comments and claims that have led to “Blackout Britain” stories include:

Predictions by the Met Office of a cold winter in 2005, triggering warnings of blackouts by unions Prospect and Amicus

In 2006, concerns were reported by energy experts that the lights would go out during the Olympics in 2012

In May 2008 the Association of Electricity Producers warned of future blackouts if EU laws were passed which limited air pollution from power stations (Independent and Express). EU laws were passed, and blackouts have not materialised

In August 2008, Professor Ian Fells was reported warning of blackouts over the next seven years, i.e. by winter 2015, in the Express and Mirror. In the same year, other experts predicted blackouts within a decade, and consultancy Capgemini within the next 3 or 4 years (reported in the Mail)

In 2009/2010, Ofgem warned of the looming “energy crisis”, and in 2012, that the UK was facing blackouts within the next 3 years

Ed Mliband’s pledge to freeze energy prices in September 2013 sparked off claims of blackouts in the media, largely founded on claims by Centrica

In March 2014, Centrica again claimed that blackouts lay ahead, this time if the Big Six were investigated for market manipulation (which they have been – without blackouts)

In 2013, 2014 and 2015, there were warnings that for each upcoming winter the UK was facing the lowest capacity margins and the highest risk of blackouts

Things that have been said to be necessary in order to prevent blackouts include new nuclear reactors (40+ articles), new coal- and gas-fired power stations, fracking and greater investment in energy

 

   

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CONCLUSIONS

Despite more than a decade of warnings that low generation capacity would cause

the lights to go out, it simply isn’t happening. The electricity system in Great Britain

has proven itself to be highly successful at delivering a reliable supply; whereas the

average Briton stands just over a 50% chance of experiencing a short outage in a

given year, this is almost certain to be caused by a problem in distribution, not

generation.

Distribution-related outages and the one single case that we have identified as

stemming from a generation failure are typically short in duration and affect a

relatively small number of people – a far cry from the “rolling blackouts” and three-

day week of the 1970s affecting people and businesses nationwide, to which media

articles sometimes hark back.

There will inevitably be a small capacity margin in the 2016/7 winter due to power

station closures in March 2016. However, the Grid has both established and new

tools for managing the situation and an excellent track record in keeping the lights

on. After 2016/7 the situation should improve; however, the policy landscape is

unclear, and it is not evident what incentives to build new generation capacity will

exist in the coming years. The government has opportunities, particularly with the

Capacity Mechanism, to incentivise the building of new power stations or

interconnectors, and to expand demand-side measures, so as to enhance resilience

still further.

Electricity network operators everywhere are becoming more and more adept at

managing intermittency; as the experience of Germany and Denmark show, greater

intermittency does not mean a greater risk of outages. In future, the development of

a smarter grid and storage will allow intermittent sources of renewable energy to play

a greater role in meeting peak demand without the risk of blackouts.